Keeping a Tight Rein on Receivables and Cash Flow
Businesses rely on a healthy cash flow to cover overhead, make payroll, and to position themselves for growth. Since most revenue is tied to receivables with invoice schedules of 30 days or longer, staying on top of who owes what takes a lot of time and resources. Below are some ways businesses can help ensure timely payments and ensure there is always a healthy cash flow.
Ask for a Deposit
When clients have money down on an order, they are usually motivated to pay off the remaining balance. Asking to a deposit on large orders – or any orders – is not an uncommon practice, and typically results in fewer client accounts aging out into collections. Businesses that require a deposit on client orders should be upfront about the policy so customers do not feel surprised once a sale is made.
Charging Late Fees
Businesses charging extra fees for late payments on invoices is becoming more commonplace across all industries. While charging late fees will not solve all payment issues with customers, it has been proven to ensure an increase in early payments on outstanding invoices. In order to protect themselves, businesses must make it clear that there are penalties for late payments. The policy must be clearly visible at the place of business, conveyed during the sale itself, and printed on the invoice. Charging late fees can increase the rate of revenue for your business, but it may not reduce the amount of time your accounting department spends tracking unpaid client balances.
Factoring services helps to streamline and automate accounts receivable and it improves cash flow. Instead of waiting 30 days or longer, tracking partial balances from deposits, or sending out notices for late fees, factoring services converts unpaid invoices to cash within 24 hours. This removes the waiting period and eliminates the need to perform collections. Factoring also allows businesses to easily cover overhead expenses and accumulate growth capital, so they can focus on success instead of devoting resources to tracking client accounts.
Growth Lending Group provides factoring services to all industries. If you would like to boost your cash flow, streamline the accounting process, and build capital to reduce the need for debt-based loans, contact our offices today and ask about our factoring services.